Felix Salmon recently proposed an interesting new profit source for newspapers like The New York Times. Citing the Times‘s recent expose on Walmart and the resulting drop in the company’s share price, Salmon wonders why the company doesn’t charge companies for early access to big stories:
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[S]houldn’t the NYT, which can always use a bit of extra revenue, take advantage of the fact that its stories can move markets so much? Not directly: I’m not suggesting that the New York Times Company should start buying out-of-the-money put options on Mexican corporates in advance of its own stories. But how much would hedge funds pay to be able to see the NYT’s big investigative stories during the trading day prior to the appearance of the story? It’s entirely normal, and perfectly ethical, for news organizations, including Reuters, to give faster access to the best-paying customers.
The following is a guest post by David Berri, a Professor of Economics at Southern Utah University. He is also the lead author of Stumbling on Wins, the general manager of the sports-economics blog Wages of Wins, and is a frequent contributor to the Freakonomics blog.
Over the last three decades, labor disputes have become a common feature in professional sports. In fact – as The Wages of Wins indicated– relative to non-sports industries, labor disputes are about 25 times more likely in professional sports. So the recent lockout in the NBA was hardly surprising. Read More »
A café in Seattle offers a 3-egg omelet breakfast for $7.99, and a 6-egg omelet breakfast for $9.99. They will let two people split the 6-egg omelet, and even let the two people order one slice of different kinds of toast with the shared omelet. Is this pricing strategy crazy?
Perhaps, but unless each person would order a 3-egg omelet otherwise and pay $15.98, perhaps not. The marginal cost of making the 6-egg omelet is really just the 3 eggs, which cost much less than $2. The good deal on the shared 6-egg omelet induces a couple to split it, and stuff themselves, rather than split a 3-egg omelet, which my wife and I often do. The incentives provided by this pricing decision may actually raise the café’s profits.
(HT to MH)